pls i need help with this questions thanks i hope is clear now thanks 1 59 Mike Rogers Industries Cost of Ca During lar years, and From the prende a se December problem terper Torsten teko Where wind CONTERRES COST OF HORNER THE WEIRD BARRAGE CENTO CAPITAL X Calibri (Body) 11 v ' ab Wrap Text General llllll V 60 Paste y A lili Merge Center $ 9 A32 x V fx B D G H 12 8 During the last few years, Mike Rogers Industries has been too constrained by the high cost of capital to make many capital investments Recently, though, capital costs have been 9 declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department Assume that you are an assistant to Le 10 Jones, the financial vice president Your first task is to estimate Mike Rogers' cost of capital Jones has provided data that she believes is relevant to your task 11 (1) The firm's tax rate is 25 13 (2) The current price of Mike Rogers' 6 percent coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,102 33 Mike Rogers does not 14 use short term interest bearing debt on a permanent basis New bonds would be privately placed with no notation costs 15 16 ) The current price of the firm's 5 5 percent, too par value, quarterly dividend, perpetual preferred stock is $108 35 Mike Rogers would incur flotation costs equal to 5 17 percent of the proceeds on a new issue 18 19 (9) Mike Rogers' common stock is currently selling at $50 per share Its last dividend (D) was 54 19, and dividends are expected to grow at a constant rate of 5 in the foreseeable future Mike Rogers beta is 1 2, the yidd on T bonds is 3 percent, and the market risk premium is estimated to be 7 percent 20 21 (5) Mike Rogers' target capital structure is 30 percent long term debt, 10 percent preferred stock, and 6 percent common equity 22 23 24 To structure the task somewhat, Jones has asked you to answer the following questions 25 26 27 ) What sources of capital should be included when you stimate Mike Rogers' weighted average cost of capital (WACC) 28 29 (2 ) Should the component costs be figured on a before tax or an after tax basis 30 31 (3 Sheld the costs be historical (embedded) costs or new (marginal) costs 32 33 What is the market interest rate en Mike Rogers' debt and its component cost of debet 34 35 COST OF PREFERRED STOCK, 36 (1 ) What is the firm's cost of preferred stock 37 38 COST OF EQUITY (INTERNAL) 39 d (1 ) What are the two primary ways companies raise common equity 40 2 ) Mike Roger doesn't plan to ur new shares of common stock Using the CAPM approach, what is Mike Rogen' estimated cost of equity 42 THE WEIGHTED AVERAGE COST OF CAPITAL 43 44 The weighted average cost of capital (WACC) is calculated using the firm's target capital structure together with its after tax cost of debt, cost of preferred stock, and cost of 45 mm equity 45 47 PROBLEM 48 What is Mike Rogers' wehted cost of capital (WACC) 42 SO Sheet1 2 During the last few years, Mike Rogers Industries has been too constrained by the high cost of capital declining, and the company has decided to look seriously at a major expansion program that had beer Jones, the financial vice president Your first task is to estimate Mike Rogers' cost of capital Jones ha (1) The firm's tax rate is 25 (2) The current price of Mike Rogers' 6 percent coupon, semiannual payment, noncallable bonds with use short term interest bearing debt on a permanent basis New bonds would be privately placed with (3) The current price of the firm's 5 5 percent, $100 par value, quarterly dividend, perpetual preferred percent of the proceeds on a new issue (4) Mike Rogers' common stock is currently selling at $50 per share Its last dividend (Do) was 54 19, future Mike Rogers' beta is 1 2, the yield on T bonds is 3 percent, and the market risk premium is est (5) Mike Rogers' target capital structure is 30 percent long term debt, 10 percent preferred stock, and 6 To structure the task somewhat, Jones has asked you to answer the following questions a (1 ) What sources of capital should be included when you estimate Mike Rogers' weighted average (2 ) Should the component costs be figured on a before tax or an after tax basis (3 ) Should the costs be historical (embedded) costs or new (marginal) costs b What is the market interest rate on Mike Rogers' debt and its component cost of debt COST OF PREFERRED STOCK, Tp c (1 ) What is the firm's cost of preferred stock COST OF EQUITY (INTERNAL), r, d (1 ) What are the two primary ways companies raise common equity (2 ) Mike Rogers doesn't plan to issue new shares of common stock Using the CAPM approach, wh THE WEIGHTED AVERAGE COST OF CAPITAL The weighted average cost of capital (WACC) is calculated using the firm's target capital structure togeth common equity PROBLEM Sheet1 F G H 1 onstrained by the high cost of capital to make many capital investments Recently, though, capital costs have been jor expansion program that had been proposed by the marketing department Assume that you are an assistant to Leigh Mike Rogers' cost of capital Jones has provided data that she believes is relevant to your task nual payment, noncallable bonds with 15 years remaining to maturity is $1,102 33 Mike Rogers does not bonds would be privately placed with no flotation costs quarterly dividend, perpetual preferred stock is $108 35 Mike Rogers would incur flotation costs equal to 5 share Its last dividend (De) was $4 19, and dividends are expected to grow at a constant rate of 5 in the foreseeable ercent, and the market risk premium is estimated to be 7 percent om debt, 10 percent preferred stock, and 60 percent common equity wer the following questions ou estimate Mike Rogers' weighted average cost of capital (WACC) tax or an after tax basis new (marginal) costs and its component cost of debt of code Using the CAPM approach, what is Mike Rogers estimated cost of it lated seg the firw's target capital structure together with its after tax cost of debt, cost of preferred stock and cost of etv s 28

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pls i need help with this questions thanks i hope is clear now thanks 1 59 Mike Rogers Industries   Cost of Ca    During lar years, and From the prende a se December problem terper Torsten teko Where     wind   CONTERRES COST OF HORNER THE WEIRD BARRAGE CENTO CAPITAL X Calibri (Body) 11 v '   ab Wrap Text General llllll V 60 Paste y A lili Merge   Center $    9 A32   x V fx B D G H 12 8 During the last few years, Mike Rogers Industries has been too constrained by the high cost of capital to make many capital investments  Recently, though, capital costs have been 9 declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department  Assume that you are an assistant to Le 10 Jones, the financial vice president Your first task is to estimate Mike Rogers' cost of capital  Jones has provided data that she believes is relevant to your task  11 (1) The firm's tax rate is 25  13 (2) The current price of Mike Rogers' 6 percent coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $1,102 33  Mike Rogers does not 14 use short term interest bearing debt on a permanent basis  New bonds would be privately placed with no notation costs  15 16 ) The current price of the firm's 5 5 percent, too par value, quarterly dividend, perpetual preferred stock is $108 35  Mike Rogers would incur flotation costs equal to 5 17 percent of the proceeds on a new issue  18 19 (9) Mike Rogers' common stock is currently selling at $50 per share  Its last dividend (D) was 54 19, and dividends are expected to grow at a constant rate of 5  in the foreseeable future  Mike Rogers  beta is 1 2, the yidd on T bonds is 3 percent, and the market risk premium is estimated to be 7 percent  20 21 (5) Mike Rogers' target capital structure is 30 percent long term debt, 10 percent preferred stock, and 6 percent common equity  22 23 24 To structure the task somewhat, Jones has asked you to answer the following questions  25 26 27 ) What sources of capital should be included when you stimate Mike Rogers' weighted average cost of capital (WACC)  28 29 (2 ) Should the component costs be figured on a before tax or an after tax basis  30 31 (3  Sheld the costs be historical (embedded) costs or new (marginal) costs  32 33   What is the market interest rate en Mike Rogers' debt and its component cost of debet 34 35 COST OF PREFERRED STOCK, 36   (1 ) What is the firm's cost of preferred stock  37 38 COST OF EQUITY (INTERNAL)  39 d  (1 ) What are the two primary ways companies raise common equity  40 2 ) Mike Roger doesn't plan to ur new shares of common stock  Using the CAPM approach, what is Mike Rogen' estimated cost of equity  42 THE WEIGHTED AVERAGE COST OF CAPITAL 43 44 The weighted average cost of capital (WACC) is calculated using the firm's target capital structure together with its after tax cost of debt, cost of preferred stock, and cost of 45 mm equity  45 47 PROBLEM 48 What is Mike Rogers' wehted cost of capital (WACC)  42 SO Sheet1   2 During the last few years, Mike Rogers Industries has been too constrained by the high cost of capital declining, and the company has decided to look seriously at a major expansion program that had beer Jones, the financial vice president  Your first task is to estimate Mike Rogers' cost of capital  Jones ha (1) The firm's tax rate is 25    (2) The current price of Mike Rogers' 6 percent coupon, semiannual payment, noncallable bonds with use short term interest bearing debt on a permanent basis  New bonds would be privately placed with   (3) The current price of the firm's 5 5 percent, $100 par value, quarterly dividend, perpetual preferred percent of the proceeds on a new issue  (4) Mike Rogers' common stock is currently selling at $50 per share  Its last dividend (Do) was 54 19, future  Mike Rogers' beta is 1 2, the yield on T bonds is 3 percent, and the market risk premium is est (5) Mike Rogers' target capital structure is 30 percent long term debt, 10 percent preferred stock, and 6 To structure the task somewhat, Jones has asked you to answer the following questions  a  (1 ) What sources of capital should be included when you estimate Mike Rogers' weighted average (2 ) Should the component costs be figured on a before tax or an after tax basis  (3 ) Should the costs be historical (embedded) costs or new (marginal) costs  b  What is the market interest rate on Mike Rogers' debt and its component cost of debt  COST OF PREFERRED STOCK, Tp c  (1 ) What is the firm's cost of preferred stock  COST OF EQUITY (INTERNAL), r, d  (1 ) What are the two primary ways companies raise common equity  (2 ) Mike Rogers doesn't plan to issue new shares of common stock  Using the CAPM approach, wh THE WEIGHTED AVERAGE COST OF CAPITAL The weighted average cost of capital (WACC) is calculated using the firm's target capital structure togeth common equity  PROBLEM Sheet1   F G H 1 onstrained by the high cost of capital to make many capital investments  Recently, though, capital costs have been jor expansion program that had been proposed by the marketing department  Assume that you are an assistant to Leigh Mike Rogers' cost of capital  Jones has provided data that she believes is relevant to your task  nual payment, noncallable bonds with 15 years remaining to maturity is $1,102 33  Mike Rogers does not bonds would be privately placed with no flotation costs  quarterly dividend, perpetual preferred stock is $108 35  Mike Rogers would incur flotation costs equal to 5 share  Its last dividend (De) was $4 19, and dividends are expected to grow at a constant rate of 5  in the foreseeable ercent, and the market risk premium is estimated to be 7 percent  om debt, 10 percent preferred stock, and 60 percent common equity  wer the following questions  ou estimate Mike Rogers' weighted average cost of capital (WACC)  tax or an after tax basis  new (marginal) costs  and its component cost of debt  of code  Using the CAPM approach, what is Mike Rogers estimated cost of it lated seg the firw's target capital structure together with its after tax cost of debt, cost of preferred stock and cost of etv s 28

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